It's a quieter day on the economic calendar. The ECB Economic Bulletin and U.S stats will influence along with chatter from Capitol Hill.
Eurozone Retail Sales (MoM) (Dec)
German Factory Orders (MoM) (Dec)
French Non-Farm Payrolls (QoQ) (Q4)
It was a mixed day for the European majors on Wednesday. The DAX30 and EuroStoxx600 rose by 0.71% and by 0.33% respectively, while the CAC40 ended the day flat.
Market sentiment remained optimistic of a speedy economic recovery mid-week, in spite of extended lockdown measures.
Upbeat service sector PMI figures from the U.S coupled with expectations of a sizeable stimulus package supported the majors.
Corporate earnings also delivered, with positive earnings outlooks supporting the market’s outlook on the economic recovery.
Economic data from the Eurozone did pin back the majors early in the session, however.
It was yet another busy day on the economic calendar. Key stats January service sector PMI figures for Italy and Spain and finalized services and composite PMI numbers for the Eurozone. Finalized French and German Services and Composite PMIs also drew attention early in the session.
For Italy and the Eurozone, prelim January inflation figures were also in the mix.
Spain’s services PMI slid from 48.0 to 41.7 in January versus a forecasted decline to 45.3. In December, the PMI had jumped from 39.5 to 48.0.
According to the January survey,
Italy’s services PMI rose from 39.7 to 44.7 versus a forecasted decline to 39.5. In December, the PMI had inched up from 39.4 to 39.7.
According to the January Survey,
France’s finalized PMI came in at 47.3, which was up from a prelim 46.5 while down from a December 49.1. In December, the PMI had risen from 39.8 to 49.1.
According to the finalized January Survey,
From Germany, the finalized PMI came in at 46.7, which was downwardly revised from a prelim 46.8 and December 47.0. In December, the PMI had risen from 46.0 to 47.0.
According to the finalized Survey,
For the Eurozone, the finalized Services PMI came in at 45.4, which was revised up from a prelim 45.0. In December, the PMI had risen from 41.7 to 46.4.
The Composite PMI came in at 47.8, which was revised up from a prelim 47.5. In December, the Composite had risen from 45.3 to 49.1.
According to the finalized January Survey,
The Eurozone’s annual rate of inflation accelerated to 0.9% in January, according to prelim figures. Economists had forecast an annual rate of inflation of 0.5%. In December, consumer prices had fallen by 0.3% year-on-year.
Core inflationary pressures also picked up, with the core annual rate of inflation accelerating from 0.2% to 1.4% in January. Economists had forecast a core annual rate of inflation of 0.2%.
According to Eurostat,
Of less influence, were Italy’s prelim inflation figures that were released alongside the Eurozone’s inflation numbers.
The market’s preferred ISM Non-Manufacturing PMI figures for January were in focus along with ADP Nonfarm Employment Change numbers.
In January, the ISM Non-Manufacturing PMI rose from 57.7 to 58.7, coming in ahead of a forecasted 56.8.
The ADP reported 174k nonfarm payroll jobs added in January, reversing a 78k decline in December.
Of less influence on the day were the Markit’s finalized services and Composite PMI numbers for January.
For the DAX: It was a bullish day for the auto sector on Wednesday. Daimler surged by 6.87%, with Volkswagen rising 1.79% to lead the way. BMW and Continental saw relatively modest gains of 0.63 % and 0.87% respectively.
It was also bullish day for the banks. Deutsche Bank and Commerzbank rose by 1.10% and by 1.22% respectively.
From the CAC, it was a bullish day for the banks. Soc Gen and BNP Paribas rose by 0.74% and by 0.71%. respectively, with Credit Agricole gaining 0.78%.
It was also a bullish day for the French auto sector. Stellantis NV rose by 0.26%, with Renault rallying by 4.77%.
Air France-KLM eked out a 0.10% gain, with Airbus SE ending the day up by 1.38%.
It was a 3rd consecutive day in the red for the VIX on Wednesday. Following on from an 15.48% slide on Tuesday, the VIX fell by 10.37% to end the day at 22.91.
The Dow and the S&P500 rose by 0.12% and by 0.10% respectively, while the NASDAQ fell by 0.02%.
It’s a relatively quiet day ahead on the European economic calendar. German construction PMI figures and Eurozone retail sales figures are due out later today.
Following disappointing retail sales figures from Germany, a more marked decline than forecasted would test support for the majors.
From the ECB, the Economic Bulletin will be the key driver on the day, however. Following some caution during the ECB monetary policy press conference, any talk of a gloomier economic outlook would test the market’s optimism.
Late in the session, the weekly jobless claims and December factory order numbers from the U.S will also provide direction.
Away from the economic calendar, positive COVID-19 vaccine news and progress towards a U.S stimulus package will also influence. On the stimulus front, it will boil down to the anticipated size of the package.
In the futures markets, at the time of writing, the Dow Mini was up by 9 points, with the DAX30 up by 25 points.
For a look at all of today’s economic events, check out our economic calendar.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.